PetroNeft has heralded its “transformative year” in the wake its of Oil India farmout deal.
The firm, which owns and operates licences 61 and 67 in the Russian basin, confirmed plans to move ahead with production in its latest company results.
PetroNeft secured a $85million investment from Oil India for licence 61. The move allowed the company to clear its debts and progress its major well drilling campaign.
Chief executive Dennis Francis said: “The farmout gave us a strong industry partner seeking to build a strategic position in Russia as well as the financial resources to develop the significant potential of Licence 61. We are currently producing from less than 15% of our reserve base and the substantial investment in infrastructure made in recent years leaves us well placed to deliver significant and profitable growth now that we have satisfactorily resolved the funding challenges of recent years.
“Drilling has recommenced at Licence 61 and significant production growth is expected in 2015.”
However, the year was not without its challenges. A dipped oil price saw production costs increase and final sales decrease for the firm.
Chairman David Golder added: “Revenue from oil sales was $29,288,078 for the year (2013: US$38,687,123). Cost of sales includes depreciation of $2,866,247 (2013: US$5,133,256), which was lower mainly because of the weaker Rouble but also because of lower production.
“The gross margin fell during the year primarily due to lower oil prices in the second half but also because of lower production in the year and therefore a higher costs per barrel because of the level of fixed costs included in cost of sales. For this reason, operating costs per barrel produced (Cost of Sales excluding depreciation and Mineral Extraction Tax) rose from $10.86 per barrel to $11.67 per barrel.
“We would expect the gross margin to improve in future periods as our facilities and field operations are fully staffed and can handle additional production from the Arbuzovskoye and Tungolskoye oil fields under the current cost structure. We produced 728,826 barrels of oil (2013: 870,965 barrels) in the year and sold 704,189 barrels of oil (2013: 879,826 barrels) achieving an average oil price of $41.59 per barrel (2013: $43.97 per barrel).”
All oil was sold on the domestic market in Russia.